*disclaimer: Not all individuals will qualify for each loan type and/or scenario. Please contact me to see if you'd qualify for these loan products and/or discuss your options.
When it comes to getting pre-approved for a mortgage, it's important to have the correct income documentation available up front. What do Loan Officers need when it comes to verifying income? In most cases, we'll ask for a borrower's most recent tax returns, including the most recent W2, 1099, K1, etc. We'll also ask for the borrower's most recent two months of bank statements, as well as their two most recent pay stubs.
Why do we need to verify so much information regarding a borrowers income? We need to make sure that they're making the amount of money that they say they're making so that we can properly calculate their debt to income ratio's. Debt to Income Ratio's play a major role in helping to determine if a borrower can qualify for a home or not. It's important to determine income before issuing a pre-approval letter.
It's also important to give loan officers the correct contact information for the borrower's employers. This isn't necessary for a pre approval, but it is necessary when it comes to going about the loan process. We will want to see at least two years of employment and income history, and this is the one of the best ways to do that.
Why do we do this?
Firstly, it helps us to once again determine what the borrower is paid from another primary source. If everything lines up with the other documentation that is given to us, then we'll be set on verifying income. The other reason behind needing a borrower's employers information is to determine if they currently work at a specific company, or if they've worked at a company in the past.
If the borrower has at least two years of employment history at their current company, then we'll verify that they're still currently employed and inquire about the likelihood of their continued employment with that company.
If the borrower has had multiple jobs in the last two years, then we'll contact each employer to verify that the borrower currently works, or had worked at those companies. We'll also inquire about income and evaluate patterns that are necessary when it comes to getting a borrower a loan.
For more information on income documentation and how it's used to qualify borrowers to get a loan, contact me today! I'd love to help you understand the reasons we do things and the importance of a borrower's income throughout the loan process.
*disclaimer: Not all individuals will qualify for each loan type and/or scenario. Please contact me to see if you'd qualify for these loan products and/or discuss your options.
Brayden Ramsay NMLS #1997195
Momentum Loans NMLS #1606597
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